This article first appeared in the St. Louis Beacon, March 1, 2012 - The U.S. housing market stayed in the basement during the fourth quarter of 2011, as one in every four homes sold were either bank-owned or in some stage of foreclosure, according to industry analysts.
The final tally for the year was a similar story: Total foreclosure-related sales in 2011 numbered 907,138 -- or 23 percent -- of all sales, according to RealtyTrac, an online marketer of foreclosure properties. That total was down 2 percent from 2010.
The report noted an increase in the number of pre-foreclosure sales in the fourth quarter. Pre-foreclosure sales, also known as short sales, were up 15 percent from the fourth quarter of 2010. In a short sale, the lender agrees to accept a sales price that is lower than the amount owed on a mortgage. Short sales might save the lender money in the long run, though, because they avoid the cost of maintenance and marketing fees on bank-owned properties. Short sales occur while a property is in default or has been scheduled for foreclosure auction.
The St. Louis market was among the top metropolitan areas in short sales during the fourth quarter of 2011. About 6 percent were pre-foreclosure sales; that was a 20 percent increase over the fourth quarter of 2010. Pre-foreclosure homes sold at an average discount of 30 percent.
Lenders are recognizing that short sales are a better option than foreclosure sales, according to a statement by Brandon Moore, chief executive officer of Realty Trac. Moore said the fourth quarter sales also indicate that the foreclosure process continues to be slowed by questions surrounding paperwork and procedures.
“We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months,” he said.
